Monterrey’s been visited recently by some of the biggesst companies in the tech business. Heavy players such as Google and Meta are frequenting the city (located in the northern Mexican state of Nuevo Leon), leaving with bagfuls of freshly graduated programmers and software engineers. Though representatives of the local IT ecosystem are thrilled with all the attention, they can’t seem to shake off a growing sense of unease.
Monterrey’s reputation in tech has been growing steadily over the last couple years. Known mostly as Mexico’s manufacturing powerhouse, the city keeps drawing the eyes of tech industry giants.
For local universities, the result has been a constant flow of graduates being funneled into US tech giants, as well as into mid-sized companies, many of them from Europe and Asia as well. In the words of Angeles Vela, General Director of Monterrey’s Tech Cluster –known as Csoftmty–, these businesses are effectively hiring “entire generations” of students graduating from tech-oriented careers.
“They have been taken by companies like Facebook, Microsoft, Google and even Tesla”, Vela said in an interview with NSAM. “Tesla has been taking entire generations not only from ITC careers, but other related academic profiles”.
Though Csoftmty doesn’t have precise data on the volume of tech graduates being hired away by big and mid-sized foreign companies, the organization estimates that the number reaches 300 graduates per semester, accounting for the city’s top universities, which include Tecnologico de Monterrey (ITESM), Universidad de Monterrey (UdeM) and Universidad Autonoma de Nuevo Leon (UANL).
The number might not seem substantial at first, but it impacts the local tech ecosystem profoundly. ITESM —regarded as Monterrey’s top university– graduated 106 students from all engineering, manufacturing and construction related-careers in 2021, according to data by Mexico’s Economy Secretariat. NSAM estimates that Mexico graduates around 130,000 tech-oriented students every year.
When bigger foreign players are leaving with 600 tech graduates every year, what’s left behind, if anything, is mostly slim pickings
A Good Problem to Have
Local tech players seem content with the fact that the biggest industry actors are shopping for talent in Monterrey. Nevertheless, the presence of giants in the city is leaving deep marks in the landscape.
IT companies are no strangers to the difficulties of finding qualified talent, particularly for the more specialized, cutting-edge and niche skills demanded by the industry. In Monterrey, though, the pool is drying fast.
“We do have a lack of people in these areas. From two years ago onwards, we’re noticing a gap between the demand for talent coming from companies and the supply of graduates provided by universities. And the gap is getting bigger”, Vela pointed out. “If the graduates we’re producing are moving out of Nuevo Leon and Mexico, we’re facing a big challenge”.
Brain drain is a well known phenomenon to Mexico. The country generates quality talent in several areas, including tech, but a lot of them leave for greener pastures –the US or Europe, most of the time– when faced with poor career prospects at home. A study by the University of Zacatecas estimates that, between 1990 and 2015, Mexico lost 1.2 million people with postgraduate education.
“If we have these sorts of good problems, it means we have a good level of education”—Angeles Vela, General Director at Csoftmty
Monterrey is known as one of Mexico’s strongest industrial arms. The local economy was built like many of the country’s border manufacturing towns. As every piece of equipment becomes a piece of sophisticated technology itself, the city saw the need to increase its own technological capacities. Consequently, many of the companies –manufacturers or otherwise– with operations in the city have a strong need for skilled tech workers.
NSAM estimates that, by the end of 2023, the number of tech workers in Monterrey will reach 55,000. In a decade, the number could hover close to 86,000. While tech graduates are being produced by the universities, the growing demand has industry observers wondering if the flow is strong enough to quench that thirst in a sustainable manner.
The problem is undeniable, but the city’s tech cluster would rather deal with low supply than with high levels of unemployment in its sector.
“It is a problem, and a challenge. But if these companies, the biggest players, are focusing in Mexico, in Nuevo Leon, that’s great for us”, Angeles Vela commented. “If we have these sorts of good problems, it means we have a good level of education”.
A Cross-Border Ecosystem
Monterrey’s growth both as a tech hotspot and as one of the main doorways for trade with the US has allowed the emergence of what can be called a cross-border ecosystem.
In a way similar to the Tijuana-San Diego dynamic, this ecosystem permitted the shaping of a “corridor” between Monterrey and several Texan cities, with Houston, San Antonio, Dallas and Austin being the most prominent. Nuevo Leon’s governor, Samuel Garcia, has kept a busy traveling schedule, which includes several visits to Texan territory. His administration also announced plans to open a trade office in Austin.
Cross-border activity isn’t limited to the government. Nearshore tech vendors such as Simpat Tech and Onephase already leverage the advantages of the cross-border ecosystem, effectively operating with one foot on each side of the border.
For educational institutions, this might result in a stronger consolidation in Monterrey. The city is already a node of sorts for Mexico’s northern region in the field of higher education. Students from all around the state travel to Monterrey to study in its top colleges. According to Angeles Vela, although Tesla announced a gigafactory in the city this year, the company has been headhunting in Monterrey for a while thanks to the quality of local talent, but also due to the availability of students coming from neighboring states such as Tamaulipas, Chihuahua, Coahuila and Durango.
Monterrey is no Silicon Valley. The argument could be made that, when it comes to software development and tech innovation, Guadalajara is Mexico’s actual crowning jewel.
Nevertheless, all of the attention coming from the US’s biggest tech player points to a bright future for the northern city. The question is whether it will be able to keep up with the mounting pressures.